Motilal Oswal has reiterated a 'Buy' rating on Hexaware Technologies with a target price of Rs 720, citing strong potential from the company's new AI-focused strategy. While the firm recently trimmed its revenue growth guidance to 6–7% for the current year due to macroeconomic headwinds, it remains confident in long-term performance.
Motilal Oswal Financial Services has maintained a positive outlook on Hexaware Technologies, setting a target price of Rs 720 per share. Based on recent trading levels around Rs 532, this valuation suggests a potential upside of approximately 35%. The brokerage’s optimism is primarily linked to the company’s pivot toward artificial intelligence, which is being positioned as a key driver for future service delivery and market expansion.
AI Strategy and Market Framework
The brokerage’s bullish view follows Hexaware’s recent Investor Day, where the company showcased its 'Zero Friction Enterprise' framework. This strategy is built on six pillars designed to simplify IT operations, with a particular focus on 'Zero License' and token-based pricing models. These initiatives are intended to help clients adopt AI solutions more easily while opening new avenues for revenue. Analysts at Motilal Oswal believe these innovative pricing models could differentiate Hexaware in a crowded IT services sector, helping it capture larger deals.
Revenue Guidance Adjustment
Investors should note that Hexaware recently lowered its revenue growth guidance for the calendar year 2026 to 6–7%, down from its previous expectation of 7.6%. Management at the company has described this revision as a 'deferral of growth' rather than a permanent loss of business. The company points to ongoing macroeconomic headwinds and delays in the ramp-up of large deals as the primary reasons for the short-term slowdown.
Despite this adjustment, the financial performance remains stable. Hexaware reported revenue of USD 405.4 million for the second quarter of 2026, marking a 6.1% year-on-year increase. The firm’s ability to sustain growth, even with current market pressures, is a focal point for the brokerage’s continued confidence.
Margin Stability and Future Outlook
A critical factor for investors is the company’s ability to manage profitability. Hexaware has maintained its EBIT (Earnings Before Interest and Taxes) margin guidance of 13–14% for 2026. This indicates that the company is effectively balancing its ongoing investments in AI development and talent acquisition without allowing profit margins to suffer significantly.
While the near-term environment remains challenging due to competitive pressures and macro uncertainty, the company anticipates a stronger performance as these delayed deals move into the execution phase later in the year. The long-term outlook will depend on how effectively Hexaware can scale its AI-led services and maintain steady demand across its key verticals, including banking, healthcare, and manufacturing.
Moving forward, shareholders may want to track the actual conversion of these AI opportunities into firm revenue and monitor any updates regarding the speed of deal ramp-ups in upcoming quarterly disclosures.